According to the PAC, 113 hospital trusts that have not yet achieve foundation trust status will struggle to reach the DH’s 2014 deadline.
Margaret Hodge, (Labour, Barking, east London) chairwoman of the PAC, said: ‘This is clearly a very tall order.
‘Four out of five of the 113 remaining trusts face financial difficulties…Twenty have declared that they will never make foundation status in their present circumstances. Half of these are in London.’
Ms Hodge was speaking at the publication of the PAC report, based on evidence from the DH, the chief executive of the NHS, and chief executives from a number of hospital trusts.
The report found that of the 113 remaining trusts, four out of five now face financial difficulties.
Almost 80% said they had to tackle strategic issues, two thirds acknowledged that they had performance and quality challenges and nearly 40% say they needed to strengthen their governance and their leadership.
According to the PAC, making all remaining trusts viable ‘presents hugely difficult challenges’ and will involve the reconfiguration of some services, possibly through mergers.
Ms Hodge warned that such a move could leave patients, often in deprived areas, without services.
‘This may deal with the financial challenges involved but could leave some deprived communities with unequal access to high quality healthcare, when hospital departments are closed and services moved,’ Ms Hodge said.
The PAC said that it was ‘particularly alarmed’ by the condition of London trusts; at least half of the acute trusts in London are not viable in their current form.
The PAC said that it was concerned that some London hospitals were in such a bad state financially that they would be forced to close.
‘The DH reassured us that none of trusts’ current plans involve closing hospitals, but some trusts are in such a poor financial state it is difficult to see why other organisations would want to take them on,’ the PAC said.
On top of these concerns, the PAC warned that long term private finance initiatives (PFI) deals would create a ‘particular dilemma’ for the DH. PFI charges have been largely responsible for six trusts not being viable, the PAC said.
‘In many cases efficiency savings alone will not be enough to make unviable trusts financially sustainable.
‘The DH faces a particular dilemma about how to manage the debt of these hospitals as their long term financial commitments make reconfiguration more difficult,’ the PAC said.
Deputy GPC chairman Dr Richard Vautrey said: ‘We should not use foundation trust status for a reason whether hospital trusts merge or not.’
Dr Vautrey warned that the deadline set by the DH could force hospital trusts to focus on their finances at the expense of patient care.
'The DH should review (the deadline). To get foundation trust status hospitals focus so much on the organisation rather than their patients,' Dr Vautrey said.
However whether or not a hospital trust achieves foundation trust status will not have a great effect on GPs or their patients, Dr Vautrey said.
‘To the average GP and patient foundation trust status is irrelevant,’ he said.
CEO of Londonwide LMCs Dr Michelle Drage said the report’s findings represented ‘the continuing saga of London’s trouble’.
Dr Drage said the findings were ‘typical’ of London, which is home to the majority of the countries population and has a wide range of deprivation and other social factors effecting healthcare, which the funding formula 'doesn’t take much account of'.
Dr Drage said the issue of poorly funded hospitals would not be a challenge that GP commissioners should have to face alone in the future.
‘I think the challenge is for commissioners and providers – the whole health economy.’
Dr Drage stressed that regardless of foundation trust status what was most important for GPs in London was ensuring that their patients received high quality care.
‘What’s of prime importance is the service itself and the service to patients,’ she said.
The King's Fund response
Responding to the report chief executive of The King’s Fund, Chris Ham, said: 'The government needs to work closely with struggling hospitals to find solutions - this will include mergers and, in some cases, service closures.
'This should be accompanied by a significant shift of resources away from hospitals and into the community to support the development of integrated care, with GPs, hospitals and community services working closely together to meet the needs of the increasing numbers of people with long term conditions,' he added.